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Feature - Making Corporate Social Responsibility indispensable for business

19.10.2012, 15:13 (CET)

In the past few decades, we have seen the term ‘Corporate Social Responsibility’ (CSR) enter our daily lexicon.Concerning actions promoted by companies on a voluntary basis, which are over and above their legal obligations towards society and environment, corporate social responsibility must become an integral part of corporate and business strategy, according to the European Union. Today, Friday October 19, the Cyprus Presidency is hosting a Conference at the Crowne Plaza Hotel in Lemesos (Limassol), with the aim of promoting transparency by companies with respect to their impact on society as a whole.

Even though ‘Corporate Social Responsibility’ may have only been formulated as such in the last few years, the question of what responsibilities businesses have towards the society in which they operate is certainly not a recent one. In fact, it can probably be traced back to the origins of business itself.

In a new definition put forward by the European Commission last year, CSR is described as “the responsibility of enterprises for their impacts on society”. It advocates how companies and businesses should voluntarily incorporate processes which look to integrate social, environmental, ethical, human rights and consumer concerns into their business operations and policy, in close collaboration with their stakeholders.

CSR – Benefits for competitiveness

Based on evidence from reports on whether CSR is beneficial from a business point of view, in particular the 2008 European Competitiveness Report, the European Commission puts forward that a strategic approach to CSR is increasingly important to the competitiveness of enterprises.

“For companies to embark on CSR does not necessarily mean doing more than they are doing but doing the same things better, in a more efficient manner,” says Mr. George Georghiou, Permanent Secretary of the Planning Bureau of the Republic of Cyprus, the coordinating authority on CSR in Cyprus.

“This is considered an important factor in increasing their competitiveness, as it can bring benefits in terms of risk management, cost savings, access to capital, customer relationships, human resource management, and innovation capacity.”

Contributing to European Union Treaty objectives

Through Corporate Social Responsibility, enterprises can significantly contribute to the European Union’s treaty objectives of sustainable development and a highly competitive social market economy. It underpins the objectives of the Europe 2020 strategy for smart, sustainable and inclusive growth. Essentially, CSR offers a set of values on which to build a more cohesive society and on which to base the transition to a sustainable economic system.

This was outlined by Vice-President of the European Commission, responsible for Industry and Entrepreneurship, Antonio Tajani, in a speech he gave earlier this year.

“It has been said often, but it is nevertheless worth repeating: CSR is more important than ever before. It represents the first steps of a transition towards a system that is radically different from the system we have known to date.It will be a system in which the concepts of competitiveness on the one hand, and sustainable development on the other hand, become increasingly indistinguishable,” Mr. Tajani said.

In a European Union context,the Commission has played a pioneering role in the development of public policy to promote CSR ever since the 2001 ‘Green Paper on Social Responsibility’, which aimed to stimulate debate about CSR within aEuropean dimension. Due to the existence of a number of international principles or instruments to guide enterprises towards social responsibility, the European Commission has not added to this plethora of instruments but rather, helps enterprises to adopt responsible behavior by choosing any of the existing instruments they prefer to abide by. Among them are the OECD Guidelines for Multinational Enterprises and the United Nations Global Compact.

Significant strides forward

In 2006, the European Commission launched its policy on ‘Making Europe a pole of excellence on Corporate Social Responsibility’, whose centrepiece was strong support for a business-lead initiative called the European Alliance for CSR. Since then, there have been a number of positive indicators of progress in the European Union.

The number of EU enterprises that have signed up to the ten CSR principles of the UN Global Compact has risen from 600 in 2006 to over 1900 in 2011. The number of organisations with sites registered under the Environmental Management and Audit Scheme (EMAS) has increased by more than 1000 in 2011, while those European enterprises publishing sustainability reports according to the guidelines of the Global Reporting Initiative rose from 270 to over 850 in the five years to 2011. Many more examples of significantimprovement exist.

Challenges remain

In spite of this progress, important challenges remain. Many companies in the EU have not yet fully integrated social and environmental concerns into their operations and core strategy.

Accusations persist of the involvement of a small minority of European enterprises in human rights harm and failure to respect core labour standards. In fact, 12 of 27 EU Member States do not have national policy frameworks to promote CSR.

According to the latest Commission Communication on the issue published last year, which aims at renewing efforts to promote Corporate Social Responsibility, CSR is even more pertinent today than it was a few years ago.

“The economic crisis and its social consequences have to some extent damaged consumer confidence and levels of trust in business. They have focused public attention on the social and ethical performance of enterprises,” states the 2011 document.

The Commission has committed to work with Member States, enterprises and other stakeholders to periodically monitor progress and should prepare a joint review meeting to be held by mid-2014. At the same time, it has called on European business leaders, including those from the financialsector, to issue, before the end of the year, an open and accountable commitment to promote, in the uptake of responsiblebusiness conduct by a much larger number of EU enterprises, with clear targets for 2015 and 2020.

Enhancing awareness and encouraging transparency

Today, October 19, the Cyprus Presidency is hosting a Conference on Corporate Social Responsibility (CSR),in which officials from the European Parliament, the Commission, Member States and the wider business community will share their views and best practices with representatives of the business community, government representatives from many member States and from Cyprus . The conference is organised by the Planning Bureau, in cooperation with the Cyprus University of Technology, , the Cyprus Chamber of Commerce and Industry and the CSRCyprusNetwork.

“The purpose of the conference is to enhance the understanding of stakeholders on Corporate Social Responsibility , increase awareness by proliferating best practices and experiences of other companies and encourage transparency," says Mrs. Georghia Christofidou-Solomonidou on behalf of the Conference organisers.